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Streaming gets all of our attention these days but there’s more to music distribution than that. Business Insider conducted a survey of adults in the United States and found some very interesting data about our very favorite music platform, Here’s what it found.
iTunes – 30%
Pandora – 23%
Spotify – 13%
Google Play – 12%
Amazon Prime Music – 9%
Apple Music – 7%
Other – 6%
Now don’t misunderstand these numbers. It doesn’t mean that people are buying songs from iTunes, just that they’re consuming what they’ve already purchased there.
There are some total surprises with these numbers though. First of all, Pandora rates almost twice as high as Spotify, and Google Play and Amazon Prime Music have similar usage numbers as Spotify. Apple Music still lags behind.
When we look at the year end streaming numbers from Nielsen and the IFPI it’s very easy to think that streaming is all everyone does these days, but as this study shows, there’s more to music consumption than that.
Some caveats with this data though. First, it’s from September of last year, and second, it takes into account all US adults. These numbers would be very skewed towards streaming if it looked at only Millennials and younger (those that listen to music much more than older adults). Still it’s important to keep in mind that as a popular music platform, iTunes isn’t dead yet.
There’s an experiment going on in Apple’s iTunes Store that not many are paying attention to, but it just might prolong the download side of the music business for a few more years. It’s true that streaming is all the rage, with subscription numbers increasing at a steady pace while the download business is falling like a rock. But not so fast – price is an issue here, just like with everything else.
As I illustrated in my article last week about the upcoming $5 streaming tiers for Pandora and Amazon, price is the way into a music consumer’s heart, and downloads are no different in that regard. As a prime example, few months ago iTunes launched a “Great 69 cents Songs” section, and while that hasn’t caused the music loving public to buy downloads in record numbers again, something else did happen that might be even more appealing to both artist and label. Yes, there were some additional sales, but what’s really interesting is that radio airplay and streams actually went up for songs in this discount section.
Hit songs are now usually priced at $1.29 on iTunes, which seems to be beyond the price resistance point for most consumers, so it’s no surprise that download sales are accelerating in the wrong direction. Even at $0.99, download numbers would continue to fall, but a 69 cents price point is appealing in that it’s almost approaching an impulse buy.
That said, the major record labels tend to only keep the songs in this section at this price for a short period of time and then return them to $1.29. Guess what? The sales then drop off.
There’s some additional strategy to placing a release in this section though, as it’s a way to keep a song on the charts when its popularity begins to wane, or to give it a boost if it’s bubbling just under the top tier of one of the various charts. [Read more on Forbes…]
When it comes to technology, the music business has always been about convenience. It’s ultimately never about the sound or even a lower cost, it’s always comes down to what’s easiest to use. Still, it’s surprising to see the MP3 file format (or the “download” as many know it) accelerating so quickly towards the end of its useful service life.
From the beginning of the modern music business, consumers have quickly gravitated to the latest technology that made it easier for them get their music fix. Going way back to the 1880s, the business consisted of distributing sheet music that the family musician would use to play the latest songs in the living room. When the player piano was introduced, piano rolls became the must-have product.
The Victrola brought the 78 RPM shellac record in the early 1900s, which was soon replaced by the much more durable 33 1/3rd RPM vinyl record that could hold more than twice as much music. But vinyl records weren’t portable, so in the 1960s 8 track tapes became a big hit for taking your music with you in your car. Cassettes were more convenient however, since they were smaller and operated more like a record album, having two sides. They also provided the ability to fast forward and reverse to quickly find the song you wanted, features not available on the 8 track.
The CD was a revelation, not so much for the digital audio it provided, but for its random access ability that let the user easily select a track with no rewinding or forwarding. This is where the music industry got greedy and included a “technology charge” on every CD, jacking the price up far higher than need be, which eventually caused a consumer backlash after the newness of the format wore off.
That dovetailed into the rise of personal computers and the internet, and the ability to share music was high on the list things that the average computer user craved. In Germany, the Fraunhofer Institute developed the MP3 file format in 1993, but it wasn’t until 1997 when it finally took off thanks to the advent of the Winamp player and popularized by MP3.com website.
An MP3 file “let the air out of the tire” of a standard digital CD file, making it about 10 times smaller in size. As a result, music files could then be easily transferred over the low bandwidth online connections of the times (remember, we’re talking the old 32kbd modem days). Not only that, a user’s favorite songs could be ripped from a CD then freely shared with friends without having to pay those sky-high CD prices. Before you knew it, the revolution had arrived as piracy ran rampant, sales waned and record stores closed.
After several feeble attempts to open up an online music store by the major labels, Apple came to rescue with iTunes in 2003, the first large scale way to monetize digital music, a move that the majors rue till this day. [Read more on Forbes…]
As Apple Music reaches its first anniversary, the service is now up to 15 million paid subscribers, second only to Spotify’s 30 million. That number may not be as rosy as it seems though, since it may be well below what many in the industry initially expected.
A recent report from Cowen & Co. predicted that U.S. revenue from all streaming services will double by 2021, but Spotify is still expected to hold the subscriber lead during that period and not Apple Music.
One of the reasons why the service can be considered to be underperforming is the fact that Apple iTunes has more than 800 million accounts with credit cards already on file, and all of them had the ability to take advantage of a 90 day free trial of the service when it launched. While it’s true that Apple Music has worked it’s way up to 15 million paid subscribers from an initial 6.5 million, that’s still less than 2% of the potential audience once considered easy to tap.
While there was no official prediction on the number of conversions from iTunes to Apple Music, you can bet that not many in Apple upper management were counting on a figure that low. It’s difficult enough to get buy-in from consumers who aren’t already your customers, but when you can’t even get your most loyal customers who’ve spent money with you before (and a lot, in some cases) to sign on, you’ve got a problem.
Granted, there are some territories where an additional $9.95 per month (or the currency equivalent of the territory) might be considered a hardship, but the fact of the matter is that there are over 580 million iPhone users worldwide, which is an expensive purchase no matter what part of the world you live. Even using that total, 15 million subscribers still brings the conversion rate to slightly above 2.5%. [Read more on Forbes...]
While Apple Music has garnered 16 million paid subscribers rather quickly since its launch last year, the service hasn’t been without criticism, especially about its ease of use. Despite being a huge company, Apple does listen to its customers though, and as a result, it’s been reported that Apple Music is about to receive a needed facelift.
The reboot is said to be set for the company’s Worldwide Developers Conference in June, and is said to include an easier user interface and more radio stations.
In a nod to Spotify’s recent success, Apple is also rolling out a “student plan” paid tier at $4.99 per month instead of the normal $9.99. Many think that the recent growth spurt of Spotify is mainly due to the introduction of a student plan, and Apple aims to find out if it can indeed emulate the same results with something similar.
That said, many analysts believe that Apple’s 16 million subscribers, while nothing to sneeze at, it’s still far lower than it should be, considering that the company has around 850 million credit cards on file thanks to iTunes and the App Store.
Many insiders feel that this can be traced back to the interesting chain of command inside of Apple Music, where a number of high ranking executives must sign off on nearly everything, making development much slower than it should be. Apple content head Robert Kondrk, Nine Inch Nails frontman Trent Reznor, design chief Jony Ive, along with former Beats founder Jimmy Iovine and Eddy Cue, the senior vice president in charge of Internet services, all are said to have their hands in the final decision making.
This has lead to somewhat of a brain drain within Apple, as many former Beats employees have left in frustration, although it’s still too early in the game to know if any of that is really a difference maker.
One thing is for sure, an updated, face-lifted Apple Music along with a new ad campaign is still a force to be reckoned with. Watch out Spotify.
Doing a great cover version of a hit song has been a successful tactic in helping to raise the visibility of an artist or band for some time, but that practice may soon come to an end thanks to new efforts by iTunes, Spotify and other streaming services.
More and more, digital streaming services are either hiding or removing cover songs, sound-alikes, re-recorded songs and live performances in an effort to simply their catalogs and make it easier for users to find the song they really want.
And they have a point. Searching for a popular song sometimes turns up more than 50 choices, making it difficult to find the original that you’re looking for.
The problem is that there are many unintended policies that come with this editorial decision.
For instance, it’s been reported by Billboard that one service’s “blacklist” of recordings that include 400 artists that range from B.B. King, Frank Sinatra, John Coltrane and Pete Seeger.
Re-records, the practice of an artist or band re-recording one of their hits so they own the recording instead of the record label, are also frequently marginalized as well, although many fans aren’t all that unhappy as most prefer the original versions.
So beware if you’re recording a cover song in the hopes of gaining some extra streams. While the practice may still work on YouTube, chances are your cover won’t see the light of day on the other streaming services from now on.